Media Statements

CoGTA To Support Makana Municipality Towards a Turnaround

The Minister of Cooperative Governance and Traditional Affairs, Dr Zweli Mkhize has concluded his visit to Grahamstown, in the Sarah Baartman region, with a commitment to provide firm support for the strengthening of Makana Municipal Municipality which is in distress.
The Minister has been visiting the Eastern Cape since the 2nd of May as part of supporting the turnaround of dysfunctional and distressed municipalities.
The Minister, accompanied by Eastern Cape COGTA MEC, Mr Fikile Xasa, met with the Executive Mayors of Sarah Baartman and Makana Municipalities and other senior leadership and councillors in Grahamstown today. He also held talks with key stakeholders, the leadership of the business community and Rhodes University. The stakeholders raised their concerns about the municipality but also committed to support government’s efforts to effect a turnaround.

Challenges facing Makana Municipality

The discussions looked at several challenges facing the municipality which need to be attended to so that it can be able to perform its functions and deliver services.

Infrastructure:

The municipality faces key challenges related to water, roads, electricity and sewerage. In addition, the municipality has inadequate drainage systems and incomplete community projects. The municipality has made little progress on the implementation of projects since 2013/14 financial year. Since 2014/15 financial year, the funds of Makana LM have been re-gazetted to the Sarah Baartman District Municipality for the administration of the funds by the district. This is due to capacity and cash flow challenges experienced by the municipality.
Challenges include regular water cuts and no planned maintenance. An average of approximately 200 leaks need attention. Taps in the townships are broken or vandalised. Some infrastructure projects are on hold. There are sewerage spillages due to the ageing infrastructure that requires replacement.
The municipality is also currently faced with a huge pothole crisis. The paved road network does not conform to the minimum accepted norms. Roads in black and coloured areas are in a horrendous state. The municipality is currently faced with replacement costs of the paved road network amounting to approximately R1.2 billion. On electricity, overhead feeder lines are not performing and there is no infrastructure master plan. The lack of and/or inadequate maintenance of existing infrastructure leads to   further deterioration of services.
Little or no priority is given to infrastructure maintenance of existing infrastructure like roads and water and waste treatment plants. This has a negative effect to attracting investors and growing the economy in the area. In 2016/17, the municipality applied for a roll-over of R22 million and only R18 million of the funds were rolled over by the National Treasury.
The 2017/18 funds were regazetted to Sarah Baartman DM, the municipality has reported 11percent of the R24 074million of the allocation.

Actions towards a turnaround:

  • COGTA’s The Municipal Infrastructure Support Agent (MISA), will assist the municipality through a district support teams by deploying resources in terms of engineering skills and advisory to address immediate basic services, such as roads, water pressure management, water and electricity losses;
  • MISA will assist the municipality review its infrastructure master plan (long-term planning);
  • The Minister of CoGTA will engage the Minister of Water and Sanitation in an effort to get DWS to fulfil its promises to the municipality on counter-funding projects;
  • The Provincial Treasury will assist the municipality develop a budget accordingly for maintenance and repairs, as well as develop and asset management plan;
  • The municipality must install boreholes, especially in farming areas, acquire resources such as vehicles, water tankers and engineers;
  • The municipality to develop concrete plans on the water conservation and demand management;
  • The Sarah Baartman District to play a more critical role to support the municipality on technical and procurement issues.
  • The National Cogta Municipal Infrastructure Grant unit must liaise with the National Treasury to support the municipality with the projects reprioritisation and projects preparation for 2018/19;
  • The Municipality will utilise offers and partnership with business and Rhodes University in the delivery of services and skills development.

Governance:
National CoGTA will support Makana Local Municipality on the review of staff establishment to provide for critical positions. Provincial CoGTA will support Makana Local Municipality to finalise the recruitment and selection processes of the appointment of the Municipal Manager.

Financial management:
Escalating debt is a major threat to the financial sustainability of Makana Local municipality and resulting on failure to effectively deliver services. There is generally a culture of non-payment by consumers for services rendered which affects and results to inability of the municipality to service its creditors (Eskom and Water Boards).
Outstanding debtors are increasing and that is evident by the debtor’s books to the tune of R414 million as at March 2018. The biggest contributor to the debtors book are households which are accounted for by R222 million or 54% of the debtors and businesses owing R38, 4 million.  Billing accuracy and integrity of data on the billing system is one of the reasons triggering challenges relating to increase on debtor’s book, as customers are not getting correct bills, incorrect classification accounts on the billing system.
COGTA will intervene to support sound financial management and improve revenue management.

The Department of Cooperative Governance has identified Makana Local municipality for support on development and implementation of simplified revenue plan in 2018/19 financial year. Once the plan is correctly implemented would contribute to reducing municipal consumer debt and enhancing revenue collection and this is in line with the processes by the municipality to improve on financial management aspects.
The Department is assessing and identifying the deficiencies that are hindering the municipality from billing all that is due to them and collecting the revenue.
The municipality needs to correct its billing system. Billing accuracy have been identified as the primary focus to ensure that customers get correct bills and that all bills are delivered to the correct customer.

The following anomalies have been identified and will need to be corrected:

  • Of the 49,870 accounts on the billing, system only 25,850 had valid customer ID numbers and 2,000 ID numbers were duplicated on different accounts. More importantly, 49% of the accounts does not have valid ID numbers. This needs to be updated as it directly affect debt collection and credit control;
  • Deceased debtors also another area of a concern, of the 25,850 valid and unique ID numbers 5,646 of these ID numbers are associated with deceased people. This is 23% of the customer base and is associated with R102 million debt. Dedicated capacity needs to be trained to deal with deceased debtors and proper verification in terms of the consumer getting the services also need to be undertaken.
  • Another cause of concern in terms of the municipal billing system are 13,357 accounts with a total debt of R81 million classified as “Not Defined” on the billing system. This debt category needs further investigation to establish which customers owe this debt and who is the municipality billing for this category;
  • Government debtor’s customer classification is also a challenge, which results in government accounts send to wrong departments and delays the recovery of outstanding debt. The municipality will be assisted with data authentication and verification, which   amongst others focus on correcting customer classification on the billing system; and
  • The billing system will be aligned with the valuation roll and the deeds register office to ensure that all properties within the municipality are billed;

Minister Mkhize said support to the municipality was critical so that it could be able to efficiently provide the necessary services to the public and stakeholders such as the business community.
National and provincial COGTA will work with the municipalities to correct deficiencies.
The Minister will return to the Eastern Cape on the 13th of May with a return visit to Keiskammahoek to address the concerns of the community. The Minister visited the community on the 3rd of May, sent by President Cyril Ramaphosa, to engage the community following service delivery protests.

Media Enquiries;
Legadima Leso
Head of Communication
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